Radiohead, The 4-Hour Work Week and the Importance of Raving Fans

It’s not just that they understand that smart marketing is about relationships more than quick one-time sales.

And it’s not just that they know it’s not just any relationship they want, but loyal, raving fans.

It’s that they know it’s about having a direct relationship with your fans.

Radiohead Blows Off Record Companies in Favor of Fans

So you’ve likely heard plenty about Radiohead’s decision to allow fans to download its new album for a donation the fan thinks is fair. And you’ve heard even more about Nine Inch Nails and Oasis planning to deal directly with fans as well, following the lead set by Prince long ago.

Some people want to believe this is about turning music free, but it’s not about free. It’s about smart business. It’s not about anti-marketing… it’s brilliant marketing.

The not-very-well-kept secret about the music business is that recording artists don’t make a lot of money selling music when labels are involved. The corporate accountants do a great job of ensuring that.

But that’s okay, since bands make money on the backend (as is so common is more business models than you might think). Concerts and merchandise make bands wealthy, and the music is actually an attraction strategy.

If the average donation for the new Radiohead album works out to more than 30% of a regular-priced CD attached to a label, the band likely makes more profit than they would have otherwise. The fact that Radiohead will allow a label to distribute a CD in 2008 doesn’t detract from the importance of this move, since the band took the low-hanging fruit known as die-hard Radiohead fans away from the intermediaries.

The most important thing anyone can take away from the revolution in music distribution is summed up well by Trent Reznor in his announcement that Nine Inch Nails was free from the tyranny of the record contract.

It gives me great pleasure to be able to finally have a direct relationship with the audience as I see fit and appropriate.

Think about that the next time you find yourself writing for Google.

Tim Ferriss and Fan-Fueled Lifestyle Redesign

I recently had the pleasure of chatting with Tim Ferriss, New York Times Bestselling author of The 4-Hour Work Week and an all around fascinating guy. I shared some strategies for his blog, and he indulged me in some of his plans for the future.

While many feel the gist of Tim’s book is about outsourcing as much of your business and life as possible, I see it a bit differently. The book is about freedom, and the fact that money is not really what we want.

We want the benefits of money.

Tim teaches people that time is not money, it’s more important than money. And although he took the traditional publishing route, it’s clear from the book that Tim understood upfront the importance of having a direct relationship with his audience that had nothing to do with his publisher.

When I read Tim’s book, I saw several obvious opportunities for him to profit on the backend, thanks to the fact that he made an effort to engage readers directly with his website at every turn. When I asked him about it, he confided that several direct marketing “gurus” had chastised him for dropping the ball and not properly “monetizing” his new audience.

I told him not to worry about it, but Tim was way ahead of me.

He then told me a story about how he needed to be in another part of the world on short notice recently. One of the people he recently met thanks to his book let him use a private jet to get there, at no charge. He enjoyed the benefits of money, thanks to his relationship with a fan.

The gist of what I took away from my conversation with Tim is that he’s not about to do anything in the name of short-term profit that damages his long-term relationship with his fans. Smart guy, since he’ll end up with more money (and more of the benefits of money) going that route.

The Little Known Blessing of Attracting Fans Directly

In my opinion, the best thing about being an online entrepreneur is the direct relationship we have with readers and prospects by default. It used to sound so cool to hear about someone landing a recording contract or a book deal, but when you realize the struggle many of those people face just to have a direct line to their own fans and maintain creative control, it doesn’t sound all that great.

It’s no secret at this point that I believe the best way for online publishers to create fans is to teach. For whatever reason, I naturally gravitated to an educational approach to selling and to paid content right from the start, and I’ve never looked back.

Whatever your approach, keep this in mind: modern marketing is less about market share, and more about share of customer. It’s much easier to keep an existing customer than it is to attract a new one, so do everything you can to retain the relationships you’ve got. Even though the allure of the Internet leads us to believe we can conceivably reach every possible person who might be interested in what we offer, you’ll make more money by focusing on attracting the right people and keeping them as happy as possible.

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Comments

But, more than anything, isn’t it really about making content people actually want (or even better, need)? Giving your crap away for free, or cutting out the middleman, doesn’t do you any good if it’s, well, crap.

I think a lot of people trying to make it big forget that part. If you present subpar content, offering it easily and cheaply doesn’t mean you’re a new media guru. You’re a stranger with candy.

Haha, perhaps it is a little obvious, but if I’ve had to explain it to a few people, I’m sure you’ve had to explain it to hundreds, if not thousands. As obvious it is or, at least should be, it’s too often seen as the afterthought, you know?

It seems that, more and more, technology is the new “middleman,” and it’s doing it better and faster than its organic competitors (music execs).

In time, I think we’re going to see this spread to other industries. Just yesterday, I was wondering when the US mail would go belly up. There’s absolutely nothing in the mail that I care for anymore. I receive and pay off my bills electronically.

Maybe we should all start refusing to accept our mail. It would be like what Radiohead is doing, but in reverse.

In any case, being in the delivery business isn’t what it used to be. If it’s going to survive, I think businesses are going to have to evolve. Otherwise, disruptive innovations (like the MP3) will wipe them out.

So many pursue music as a career because of their passion for the art. Even when it is not paying they don’t give up because they couldn’t if they wanted to. It is a part of their being. And often reaching just one more individual through their music is more satsifying than the paycheck.

The best writers and bloggers are the same. Darren and Yaro (and yourself) don’t write keyword stuffed articles that alienate your audience. You write compelling content that endeavours to enrich the lives of those you are reaching out to. And I strongly suspect that if the revenue stream were to dry up tomorrow, our best bloggers would still contecting with their fans just the same.

As a musician myself who has tried his hand at this game full-time, the very fact that throughout the history of R&B, blues, and rock & roll, the record companies (compare them to Google, if you will) have a strangle hold on the distribution process as far as mass quantity goes.

We find people like Chuck D, Ani Defranco, Prince, Radiohead and others very inspiring because they did it without the things that we thought we “had to have” to be successful.

Let’s say, if I wrote a great song, like my tune Technology Is Killing Me for example, and I wanted to get it out there for people to hear. Using new sites like Garageband that allow me to directly chat, get fan reviews of my work, and otherwise have a instant, direct, personal connection with people- that meant the world to me.

According to the group’s manager this was not a way to cut out the middle man… this was actually a creative attempt to sell more CDs. In fact, the sound quality on the Radiohead offer is not the same as what a CD would offer – and for those who are fans of Radiohead in order to truly appreciate their music sound quality is essential. So much for “avoiding the middle man” – this was a cleverly design PR scheme designed to generate buzz about the album.

Throw the Madonna / Live Nation deal into the mix, too – it’s a new paradigm for recording artists that puts the concert appearences in the foreground and the recording as ancillary to that.

Imagine if a filmmaker like Kevin Smith or Robert Rodriquez inked a deal with NetFlix instead of Miramax and treated the theatrical release as beside the point – but focused on DVD sales / rentals and maybe a mini lecture / film tour.

I’m a photographer and a film maker and only recently have I gotten back into the swing of marketing my stuff. I’m focusing on just writing honestly about what I’m doing, making sure to get my work out there and I’ve started doing contests to win copies of my prints or to get music in my films. I’m using Creative Commons licenses, too.

Nice post…and I read your free report about teaching sells. I think you’re right on about that and look forward to seeing more about it. I read The 4 Hour Workweek over last summer and try to apply as much as I can from it to my life…it’s somewhat working, but the biggerst hurdle for me is to find a great muse.

I think the way to fully achieve the freedom I’m looking for is to to take Tim’s approach and your approach about TeachingSells and put them together! Loking forward to reading more about Teaching sells…soon.

Thanks for bringing your readership’s attention to this phenomenon. I urge you to check out other musicians who have been doing it for 15 years–Little Feat. http://littlefeat.com/ They also upload videos of their concerts to YouTube. And post on MySpace. Every January they hold a 4-day musical and educational event in Jamaica, with concerts, songwriting classes, instrumental lessons, et al. They have a phenomenal grassroots community, and support humanitarian projects, such as collecting school supplies for Jamaican students, etc. Check ‘em out…

A very nice article however some of the information is incorrect regarding the music industry. I do 100% agree that the strategy Prince and Radiohead have taken on is an excellent 1 which will reap many rewards but regarding the money made by artists yes it is a small % but in comparison to the overall price of a CD the biggest benefactor is the record shop and distributor.

Records shops and distributors hold a lot of weight over the record company. For example the last thing Sony for example want id for Virgin records to stop selling their CD’s as they know how many people buy from that shop. Shop can mark up CD prices by as much as 300%.

Regarding the fact that you state that concerts and merchandise make bands wealthy. By all means merchandise can make a band a lot of money but touring hell no. Bands can lose money on tour. Some record companies do not pay for bands touring, if they do they take it away from the bands % of CD sales. Only the biggest of bands can actually make money from touring. Most bands lose money but they know that when they tour their CD sales will increase for a while (touring creates publicity which creates CD sales).

It just seems healthier to focus on keeping your readers happy than on focusing on making money. When you focus only on the end result, without regard to how to get there, it’s too easy to lose your way, get bogged down by confusion or details, all while being frustrated that things aren’t happening faster. Whereas focusing on what you’re giving your readers–the “if you build it, they will come” approach–seems more fundamentally sound. Or something like that (grin).

Brian, I really want to drive this point home for myself, in that creating ultra-valuable content that people are hungry for is of the most importance. My birthday is coming up- any books you would recommend?

You’re going to be so bombarded at BlogWorldExpo that we won’t be able to hang and have a long talk, but I’ll tell you that I wish we could. How can you consistently write such spot on posts? Oh. Right. That’s your gig!

I think Snowboardjohn is right on though. This isn’t quite a no-brainer move for Radiohead and NIN (depends a lot on their distribution costs) but would seem foolish for an “unknown” artist. If you were such an artist and you had the choice between releasing something digitally for free on your own, or taking a deal with a major label, you would be very foolish to turn down the major label. The web is providing vectors for organic growth (MySpace, last.fm, etc.) but it’s not enough … yet.

What gets interesting is how the major label equation changes if more and more of their stars go solo a la Radiohead and NIN. I don’t know the economics, but one can imagine that the huge profits a major label makes off a star allows them to lose money on unknown artists. Maybe they can have 20 failures for every hit, but if they lose their established artists, maybe that goes down to 5 failures. That’s complete conjecture on those numbers, but it’s seems that secondary effects like that are inevitable.

The point is that if major labels become less effective promoters for new artists, then secondary promotion channels (MySpace, last.fm, etc.) would become more important and effective by default. Reminds of the NIN album “The Downward Spiral.”

Michael, it is indeed early days for anyone to declare that everything is different, and I for one think the labels are not dead. They are powerful brands with powerful distribution networks. But they are going to have to wake up and adapt to reality, much like the film industry did when television came along.

Those businesses that meet sustained profitability and success – both small and large – know how that the secret to winning business is to create an offering that will make their customer base go absolutely crazy.

I think it can also be argued that this is also very smart for an unestablished act trying to build a fanbase…if you’re big enough for a major label to want to sign you, though, you’re kind of established…

if you want to read something that may make you think about the music industry different, read producer Steve Albini’s article The Problem With Music, written YEARS ago…

i have to disagree with everyone praising Prince as a trendsetter. he cut out the middle man to charge FULL PRICE and take it all himself. Radiohead gave u the option to pay what u think it is worth, that is revolutionary. and trent will probably due something similar. to cut out all the record industry process and charge the same is not heroic.

this is by far the best post you’ve produced in a while. your writing tips do come in handy, don’t get me wrong, but it seemed that i was just reading the same basic posts over and over. Hey, it happens sometimes, eh? I appreciate that you zipped off in a slightly different direction with marketing. Love this one…

I don’t think they are on about Prince distributing CD’s himself. They mean when Prince gave his latest album away free with a newspaper (he will of course have been given a fee for it). A lot of people in the music industry slagged him for it and said it devalued the music.

I liked this blog a lot. Timothy Ferriss certainly does a great job of attracting customers by maintaining a long term relationship with them. Everyone who visits http://www.timferriss.com is sure to become hooked to the site.

Hi Brian, read your TeachingSells PDF. I don’t think it would have impacted me the same way a year ago. Now, after 12 months of having gone through all the mistakes you mentioned in that report, every page was so impactful for me. I closed the last page, saying to myself, ‘This man is my trusted teacher’.

If you haven’t read it, download it from http://www.teachingsells.com . And now readers, you are convinced I am an affiliate or something. No, just another raving fan of Brian Clark.

I’ve joined, I’ve joined! Can’t wait to learn about integrating KoolMoves, Camtasia, Articulate into my content in Course 3, and executing the blueprint for a membership site with aweber, amember, moogle, etc in Course 5. Just can’t believe $97 for all 5 courses. I must be at the top of the funnel stage, you know the give-away stage…

I really am not a paid niece of Brian, I have a site that I know will be boosted to a totally different level using these skills: http://www.JoyRemembered.com , that’s why I am so excited.

Thanks Brian! I was intrigued by the review of Tim’s book. A friend told me about the book, but I have not purchased it yet, and reading personal and real review that you have put on your blog make me want to read it for myself.

Tyler — it’s a great book. I was surprised how much I got from it; it’s more than just tips and strategies, it’s a philosophy of living, and a great insight into a complete paradigm shift from what many (if not most) of us were indoctrinated with growing up.

Well, while in principle I think the direction Radiohead, Prince, and Reznor are going is the best one for the future of music, I’m not quite sure that Radiohead and Prince are executing their plans in such a way that alienating their fans hasn’t become an issue.

Radiohead did not offer their album in a high quality download (e.g. lossless format) and on top of it, are planning on re-releasing the album in a special edition format that includes more material. Hence, they expect the fans to buy the album twice–sound familiar to all you folks who bought vinyl? Their campaign, when put under analysis, seems like something a young music exec would “spin”, in my opinion.

Prince is sending DMCA notices to YouTube regarding clips that have his music in them. I can see the need to prevent people from uploading concert footage and things of that nature, but clips with toddler’s dancing to his music? Seems a bit anti-audience to me. His lawyerly approach would seem to jibe with his experience trying to get his name and music back, though. But it also suggests that he doesn’t really get what the audience wants.

Reznor, on the other hand, seems to actually understand his fans and the young, techno-literate audience. He trash-talks the music execs and the companies that back the RIAA. He claims he was a member of a large music bittorrent site that recently got taken down, and admits he’s pirated music. The first album under his care that has been released (not his) was released DRM-free in both lossy and lossless formats, at a set price of $5.

From my point of view, only Reznor truly understands on all levels the big picture in the way that the denizens of the internet what in a relationship with their rock stars. From my read, he’s just added modern technology to the recipe that has driven bands like Grateful Dead, Phish, and others in the off-line world for decades–fans first.

Labels are great avenue’s for artists and packages
within corporate media. Online marketing and self employed distribution is wonderful as well, if you
have the time, money and knowledge to complete
your success. I think Radiohead’s decision -though
controversial will help other emerging artists come
to a realisation that most unsigned artsists may not be
as successful financially as Radiohead or Prince, but
in some ways will be another example as a stepping stone to these unsigned artists that the industry in itself will be heading this route more than before, so
get on the independent band-wagon while you can.
Nowadays, we have noticed millions of artists or so-called artists emerging due to MySpace, American Idol-UNDERGROUND, Soundclick, MP3dotcom ext.
People should remember that recording companies will always be there as long as people leave there
homes to shop. I don’t see commercial store chains
carrying unsigned artists in the near future.
But, i guess you never know what’s gonna happen.

It seemed radiohead was getting close to a solution but now, as I’m sure you’re all aware of, their fans were opting to not pay a cent, in most cases. i’m still for cutting out the middlemen, but it looks as though we’re kind of back to the drawing board

I’m surprised at how many negative comments I’ve seen about the book on various forums – far more positive ones, mind you, but I’m surprised nonetheless.

It seems that people have missed the big picture – the book is not really about outsourcing or email management. It’s about defining what’s important, and learning how to make change when something sucks.